<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB/A
AMENDMENT NO. 1
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended DECEMBER 31, 1996
-----------------
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ______________to______________
Commission file number : 0-17287
---------
GLOBAL OUTDOORS, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
ALASKA 33-0074499
- ------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
43445 BUSINESS PARK DR. SUITE 113, TEMECULA, CALIFORNIA 92590
-------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (909) 699-4749
--------------
Securities registered pursuant to Section 12 (b) of the Act: None
----
Securities registered pursuant to Section 12 (g) of the Act:
COMMON STOCK
--------------------------------------------------------------
(Title of Class)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15 (d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes [ ] No [X]
<PAGE>
Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B is not contained in this form, and no disclosure will
be contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [ ]
State issuer's revenues for its most recent fiscal year $5,485,008.
State the aggregate market value of the voting stock held by
non-affiliates computed by reference to the price at which the stock was sold,
or the average bid and asked prices of such stock, as of a specified date within
the past 60 days.
On April 2, 1997, 772,922 shares of voting Common Stock were held by
non-affiliates of the registrant. On Said date the aggregate market value of
such Common Stock was $3,188,303.
(ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PAST FIVE YEARS)
Check whether the issuer has filed all documents and reports required
to be filed by Section 12, 13 or 15 (d) of the Exchange Act after the
distribution of securities under a plan confirmed by a court. Yes [ ] No [ ]
(APPLICABLE ONLY TO CORPORATE REGISTRANTS)
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as latest practicable date:
Number of Shares Outstanding
Class at April 2, 1997
- ------------------------------ ----------------------------
Common Stock 4,128,814
DOCUMENTS INCORPORATED BY REFERENCES
If the following documents are incorporated by reference, briefly
describe them and identify the part of the Form 10-KSB (e.g., Part I, Part II,
etc.) into which the document is incorporated: (1) any annual report to security
holders; (2) any proxy or information statement; and (3) any prospectus filed
pursuant to Rule 424 (b) or (c) under the Securities Act of 1933 ("Securities
Act"). The listed documents should be clearly described for identification
purposes (e.g., annual report to security holders for the fiscal year ended
December 24, 1990).
None.
Transitional Small Business Disclosure Format (check one):
Yes [ ] No [X]
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<PAGE>
ITEM 7. FINANCIAL STATEMENTS.
Following are consolidated financial statements of the registrant for
the years ended December 31, 1996 and 1995. The consolidated financial
statements for the ended December 31, 1996 have been restated effective December
11, 1998.
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<PAGE>
GLOBAL OUTDOORS, INC.
AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
-4-
<PAGE>
TABLE OF CONTENTS
Page
Report of Independent Public Accountants.......................................6
Consolidated Balance Sheets....................................................8
Consolidated Statements of Operations.........................................10
Consolidated Statements of Stockholders' Equity...............................11
Consolidated Statements of Cash Flows.........................................12
Notes to Consolidated Financial Statements....................................14
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<PAGE>
ARTHUR ANDERSEN LLP
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
----------------------------------------
To the Board of Directors of
Global Outdoors, Inc.:
We have audited the accompanying consolidated balance sheet of GLOBAL OUTDOORS,
INC. (an Alaska corporation) AND SUBSIDIARIES as of December 31, 1996, and the
related consolidated statements of Operations, stockholders' equity and cash
flows for the year then ended, as restated, seeNote 14. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Global Outdoors,
Inc. and subsidiaries as of December 31, 1996, and the results of their
operations and their cash flows for the year then ended in conformity with
generally accepted accounting principles.
/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
Orange County, California
April 15, 1997, (except for Note 14,
as to which the date is December 11,
1998)
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<PAGE>
KENNETH E. WALSH
CERTIFIED PUBLIC ACCOUNTANT
3820 DEL AMO BLVD.
SUITE 305
TORRANCE, CA 90503
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
Global Outdoors, Inc.
Temecula, California
I have audited the accompanying consolidated balance sheet of Global Outdoors,
Inc. and Subsidiaries as of December 31, 1995 and the related consolidated
statements of operations, stockholders' equity and cash flows for the year then
ended. These financial statements are the responsibility of the Company's
management. My responsibility is to express an opinion on these statements based
on my audit.
I conducted my audit in accordance with generally accepted auditing standards.
Those standards require that I plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
I believe that my audit provides a reasonable basis for by opinion.
In my opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Global Outdoors,
Inc. and Subsidiaries as of December 31, 1995, and the results of their
operations and their cash flows for the year then ended, in conformity with
generally accepted accounting principles.
Kenneth E. Walsh
Certified Public Accountant
January 20, 1997
-7-
<PAGE>
<TABLE>
GLOBAL OUTDOORS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1996 AND 1995
<CAPTION>
ASSETS
Restated
1996 1995
------------ ------------
<S> <C> <C>
CURRENT ASSETS
Cash $ 82,027 $ 458,448
Current portion of stockholder receivable 56,400 40,800
Advertising receivables, net of allowance for doubtful accounts
of $39,242 and $15,104 in 1996 and 1995, respectively 82,334 135,937
Income taxes receivable 230,000 75,281
Inventories 159,361 192,268
Prepaid expenses 174,372 560,059
------------ ------------
Total current assets 784,494 1,462,793
MEMBERSHIP RECREATIONAL
MINING PROPERTIES, NET 995,010 646,717
ALASKA RECREATIONAL
MINING PROPERTIES, NET 1,465,609 1,550,052
OUTDOOR CHANNEL EQUIPMENT, NET 386,584 147,919
OTHER EQUIPMENT AND LEASEHOLD
IMPROVEMENTS, NET 232,703 79,051
STOCKHOLDER RECEIVABLE 223,657 306,874
TRADEMARKS, net of accumulated amortization of $4,720 and
none in 1996 and 1995, respectively 85,601 41,248
DEPOSITS AND OTHER ASSETS 52,240 342,201
------------ ------------
TOTAL ASSETS $ 4,225,898 $ 4,576,855
============ ============
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
-8-
<PAGE>
<TABLE>
GLOBAL OUTDOORS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1996 AND 1995
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
Restated
1996 1995
------------ ------------
<S> <C> <C>
CURRENT LIABILITIES
Line of credit $ 715,322 $ 33,139
Current maturities of long-term debt 303,593 21,567
Current maturities of capital leases 47,172 17,726
Customer deposits 9,500 16,979
Accounts payable and accrued expenses 420,198 159,802
Deferred revenue, current - 1,134,794
------------ ------------
Total current liabilities 1,495,785 1,384,007
DEFERRED REVENUE, Less current portion 2,084,782 421,814
LONG TERM DEBT, Less current portion 637,717 252,724
CAPITAL LEASES, Less current portion 192,664 74,831
------------ ------------
Total liabilities 4,410,948 2,133,376
------------ ------------
STOCKHOLDERS' EQUITY
Convertible preferred stock, non voting, 10%
noncumulative, no liquidation preference,
$.001 par value; 10,000,000 shares authorized;
shares issued and outstanding 60,775 in 1996 and
63,195 in 1995 61 63
Common stock, $.02 par value; 50,000,000 and
5,000,000 shares authorized in 1996 and 1995, respectively;
shares issued and outstanding:
4,122,394 in 1996 and 4,074,988 in 1995 82,448 81,500
Additional paid-in capital 2,941,163 2,793,938
Preferred stock dividend payable in common stock 12,640 -
Retained deficit (3,000,112) (210,772)
Common stock subscriptions receivable (221,250) (221,250)
------------ ------------
Total stockholders' equity (185,050) 2,443,479
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 4,225,898 $ 4,576,855
============ ============
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
-9-
<PAGE>
<TABLE>
GLOBAL OUTDOORS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
DECEMBER 31, 1996 AND 1995
<CAPTION>
Restated
1996 1995
------------ ------------
<S> <C> <C>
REVENUES:
Alaska trip $ 828,901 $ 656,161
Merchandise sales 488,973 -
Membership sales 2,910,447 3,133,110
Advertising 960,462 439,817
Interest 23,789 43,039
Other income 45,436 68,840
------------ ------------
Total revenues 5,258,008 4,340,967
EXPENSES:
Alaska trip expenses 553,596 235,832
Cost of merchandise sold 321,843 -
Cost of memberships sold 268,974 684,072
Satellite transmission fees 1,441,619 901,294
Advertising and programming 945,357 157,899
Selling, general and administrative 4,582,674 2,404,131
Interest 138,303 38,218
------------ ------------
Total expenses 8,252,366 4,421,446
------------ ------------
Loss before income taxes (2,994,358) (80,479)
Income tax benefit 217,658 30,582
------------ ------------
Net loss $(2,776,700) $ (49,897)
------------ ------------
Loss per share $ (0.68) $ (0.01)
============ ============
Weighted average number of common
shares outstanding 4,103,141 3,867,517
============ ============
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
-10-
<PAGE>
<TABLE>
GLOBAL OUTDOORS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1996 AND 1995 (RESTATED)
<CAPTION>
Preferred
Additional Common stock stock
Preferred stock Common stock paid-in Retained subscriptions dividend
Shares Amounts Shares Amounts capital deficit receivable payable TOTAL
---------- ---------- ---------- ------------ ----------- ------------ -------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance,
December 31, 1994 65,455 $ 65 3,843,410 $ 76,868 $2,060,520 $ (111,780) $ (221,250) $ - $1,804,423
Preferred stock
converted to
common stock (2,260) (2) 2,260 45 (43) - - - -
Common stock issued
for services - - 27,670 553 109,871 (22,911) - - 87,513
Common stock issued
for private
placement - - 195,102 3,902 597,538 - - - 601,440
Common stock issued
as dividend on
preferred stock - - 6,456 132 26,052 (26,184) - - -
Net loss - - - - - (49,897) - - (49,897)
---------- ---------- ---------- ------------ ----------- ------------ -------------- ----------- -----------
Balance, December
31, 1995 63,195 63 4,074,988 81,500 2,793,938 (210,772) (221,250) - 2,443,479
Preferred stock
converted to -
common stock (2,420) (2) 2,420 48 (46) - - -
Common stock issued
for services - - 21,568 431 90,400 - - - 90,831
Common stock issued
in private
placement - - 26,868 538 75,526 - - - 76,064
Purchase of partial
shares - - - - (9) - - - (9)
Preferred stock
dividend payable
in common stock - - - - - (12,640) - 12,640 -
Retirement of
treasury stock - - (3,450) (69) (18,646) - - - (18,715)
Net loss - - - - - (2,776,700) - - (2,776,700)
---------- ---------- ---------- ------------ ----------- ------------ -------------- ----------- -----------
Balance, December
31, 1996 60,775 $ 61 4,122,394 $ 82,448 $2,941,163 $(3,000,112) $ (221,250) $ 12,640 $ (185,050)
========== ========== ========== ============ =========== ============ ============== =========== ===========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
-11-
<PAGE>
<TABLE>
GLOBAL OUTDOORS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1996 AND 1995
<CAPTION>
Restated
1996 1995
------------ ------------
<S> <C> <C>
Cash Flows from Operating Activities:
Net loss $(2,776,700) $ (49,897)
Adjustments to reconcile net loss to net
cash used in operating activities: 263,144 137,806
Depreciation and amortization 24,138 5,906
Provision for doubtful accounts - (127,352)
Deferred income taxes 90,831 87,513
Common stock issued for services
Application of rent obligation toward reduction of stockholder
note receivable 67,617 20,788
Change in assets and liabilities: 32,907 (162,268)
(Increase)/ decrease in inventory 385,687 (428,206)
(Increase)/ decrease in prepaid expenses (154,719) 11,384
(Increase)/ decrease in income taxes receivable 29,465 (64,964)
(Increase)/ decrease in advertising receivables 289,961 (285,226)
(Increase)/ decrease in deposits and other assets
(Increase)/ decrease in accounts payable and accrued expenses 260,396 (61,754)
(Increase)/ decrease in deferred revenue 528,174 311,500
(Increase)/ decrease in customer deposits (7,479) 11,659
------------ ------------
Net cash used in operating activities (966,578) (593,111)
------------ ------------
by operating activities
Cash Flows from Investing Activities:
Purchase of property, plant and equipment (919,311) (473,218)
Expenditures for trademarks (44,353) (31,583)
------------ ------------
Net cash used in investing activities (963,664) (504,801)
------------ ------------
Cash Flows from Financing Activities:
Proceeds from private placement 76,064 601,440
Proceeds from long-term debt, net 1,496,481 189,807
Retirement of Treasury Stock (18,715) -
Purchase of partial shares (9) -
------------ ------------
Net cash provided by financing activities 1,553,821 791,247
------------ ------------
Net decrease in cash (376,421) (306,665)
Beginning cash balance 458,448 765,113
------------ ------------
Ending cash balance $ 82,027 $ 458,448
============ ============
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
-12-
<PAGE>
<TABLE>
GLOBAL OUTDOORS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
YEARS ENDED DECEMBER 31, 1996 AND 1995
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
Supplemental Disclosures of Cash Flow Information:
Cash paid for:
Income taxes $ - $ 11,384
============ ============
Interest $ 132,677 $ 38,218
============ ============
Supplemental Disclosures of Noncash Investing and
Financing Activities:
Land acquired by incurring note payable $ 200,000 $ 93,373
============ ============
Common stock issued as a dividend on preferred stock $ - $ 26,184
============ ============
Application of rent obligation toward reduction of stockholder
note receivable $ 73,150 $ 57,000
============ ============
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
-13-
<PAGE>
GLOBAL OUTDOORS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
NATURE OF BUSINESS:
Global Outdoors, Inc. (the Company) owns and operates The Outdoor Channel, Inc.,
the first national television network devoted solely to outdoor activities, such
as hunting, fishing, scuba diving, camping, RV-ing and recreational gold
prospecting. The Company's other business activities consist of the promotion
and sale of an "Alaska trip", a recreational gold mining expedition to the
Company's Cripple River property located near Nome, Alaska, and the sale of Lost
Dutchman's (LDMA-AU, Inc.) memberships which entitle members to engage in
recreational prospecting on its California, Oregon, Alaska, Nevada, Arizona,
Colorado, Georgia, North Carolina and South Carolina properties. The Company has
also signed a mutual use agreement with another organization whose members are
entitled to engage in recreational mining on certain of each other's properties.
The Company also receives revenues from the sale of memberships in a gold
prospecting club, Gold Prospectors' Association of American, Inc. (GPAA),
revenue from advertisers in a bi-monthly magazine, advertising revenue through
cable television programming d/b/a The Outdoor Channel, Inc. and through
merchandise sales. Effective July 23, 1996, the Company changed its name from
Global Resources, Inc. to Global Outdoors, Inc.
The Company's operations are subject to various government regulations. The
operations of cable television systems, satellite distribution systems and
broadcast television program distribution companies are subject to the
Communications Act of 1934, as amended, and to regulatory supervision thereunder
by the Federal Communications Commission (the FCC). The Company's leased uplink
facility in Perris, California is licensed by the FCC and must be operated in
conformance with the terms and conditions of that license. Cable systems are
also subjected to local franchise authority regulation.
During 1996, the Company experienced significant operating losses, principally
from the operation of The Outdoor Channel, Inc. As a result of losses in 1996
and prior years, at December 31, 1996, the Company has negative working capital.
Furthermore, losses subsequent to December 31, 1996 have resulted in a deficit
stockholders' equity position. The Company is currently conducting a public
offering of common stock, and management is discussing additional
capital-raising efforts with third parties; however, management is unable to
predict the outcome of the discussions or determine to what extent the Company
will increase its capital base. Management is also currently negotiating
carriage agreements with third parties that could result in a significant
increase in the subscriber base for The Outdoor Channel, Inc., which would
result in an increase in advertising revenue for the Company; however,
management is unable to predict the outcome of those negotiations or determine
when the Company's revenues will increase. Under the terms of such carriage
agreements, the Company could be required to pay significant up-front fees.
Management believes the Company will be able to obtain financing to pay any such
fees. In April, 1997, the Company entered into an agreement with Perry T.
Massie, Thomas H. Massie and Wilma M. Massie (the Principal Stockholders),
whereby the Principal Stockholders agreed to provide for the cash flow
requirements of the Company over the next twelve months by means of loans or
equity investments.
SIGNIFICANT ACCOUNTING POLICIES:
PRINCIPLES OF CONSOLIDATION:
The consolidated financial statements include the accounts of Global Outdoors,
Inc. and its wholly-owned subsidiaries, LDMA-AU, Inc., Big "M" Mining Company,
Inc., Gold Prospectors' Association of American, Inc and The Outdoor Channel,
Inc. which operates a satellite and cable television channel. All material
intercompany accounts and transactions have been eliminated in consolidation.
-14-
<PAGE>
GLOBAL OUTDOORS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
INVENTORIES:
Inventories are valued at the lower of cost (first-in, first-out) or market.
TRADEMARKS:
Trademarks are amortized on a straight-line basis over 15 years.
MEMBERSHIP RECREATIONAL MINING PROPERTIES:
Membership recreational mining properties consist primarily of land, are held
for membership use and are recorded at cost, net of accumulated depreciation on
non-land assets provided on a straight-line basis over 15 years.
ALASKA RECREATIONAL MINING PROPERTIES:
Alaska recreational mining properties consist primarily of land, buildings and
equipment and are recorded at cost, net of accumulated depreciation on the
buildings and equipment provided on a straight-line basis over 10 years.
OUTDOOR CHANNEL EQUIPMENT:
Outdoor Channel assets consist primarily of equipment and are recorded at cost,
net of accumulated depreciation provided on a straight line basis over five
years.
OTHER EQUIPMENT AND LEASEHOLD IMPROVEMENTS:
Equipment and leasehold improvements are carried at cost net of accumulated
depreciation provided on a straight line basis over five to ten years.
REVENUE RECOGNITION:
Revenue on the "Alaska trip" income is recognized when trips are taken. Trips
are taken in June through August each year.
The Company has sold memberships in LDMA-AU primarily on an installment basis.
Memberships include contracts that give purchasers recreational prospecting and
mineral rights to the Company's land and rights to use the land and facilities
for camping and recreational vehicle parking. The contracts are generally
noninterest bearing, unsecured and provide for a down payment and monthly
installments of $25 for periods of up to ten years. No deferred revenue or
accounts receivable have been recorded for amounts not yet due under the
contract terms due to uncertainty of collection. Sales revenue is recognized
based upon a weighted average ten year straight line method. The ten year
weighted average method was established based upon historical membership
longevity, taking into consideration member defaults and withdrawals. Deposits
are taken on new sales contracts, and are fully refundable for 10 days.
-15-
<PAGE>
GLOBAL OUTDOORS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Company also sells GPAA memberships for periods varying from one year to
lifetime memberships. For nonlifetime memberships, revenue is recognized over
the life of the membership. Approximately 10% of GPAA members are members of
LDMA-AU referred to in the paragraph above. Based on demographics, the GPAA
members have a longer term than LDMA-AU members. Management estimates the
expected period of time a lifetime member is active in the GPAA to be fifteen
years. Accordingly, for lifetime memberships, revenue is recognized on a
straight line basis over fifteen years.
Advertising revenue for The Outdoor Channel, Inc. is recognized when the
advertisement takes place. Advertising revenue from advertisers in the Company's
bi-monthly magazine is recognized when the magazine is distributed.
RECLASSIFICATION:
Certain prior year amounts in the consolidated financial statements have been
reclassified to conform to the current year presentation.
ADVERTISING:
Advertising costs are charged to expense as incurred and production costs of
advertising are expensed the first time the advertising takes place.
IMPACT OF RECENT ACCOUNTING PRONOUNCEMENTS:
Effective in 1997, the Company will be required to adopt Statement of Financial
Accounting Standards No. 128, "Earnings per Share" and No. 129, "Capital
Structure." The impact of the adoptions of these pronouncements is not expected
to be material to the Company's financial position or results of operations.
INCOME TAXES:
Deferred taxes are provided on the liability method whereby deferred tax assets
are recognized for deductible temporary differences and deferred tax liabilities
are recognized for taxable temporary differences. Temporary differences are the
differences between the reported amounts of assets and liabilities and their tax
basis. Deferred tax assets are reduced by valuation allowance when, in the
opinion of management, it is more likely than not that some portion or all of
the deferred tax assets will not be realized. Deferred tax assets and
liabilities are adjusted for the effects of changes in tax laws and rates on the
date of the enactment.
LOSS PER SHARE:
The computation of loss per share is based on the weighted average number of
common and common equivalent shares outstanding during the year. In 1996 and
1995, the weighted average number of shares for computing loss per share was
4,103,141 and 3,867,517, respectively. The computation of fully diluted loss per
share was antidilutive in each of the periods presented; therefore, the amounts
reported for primary and fully diluted loss are the same.
USE OF ESTIMATES:
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make certain estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
-16-
<PAGE>
GLOBAL OUTDOORS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FAIR VALUE OF FINANCIAL INSTRUMENTS:
The carrying value of accounts receivable and trade payables approximates the
fair value due to their short-term maturities. The carrying value of the
Company's debt is considered to approximate fair market value as the interest
available to the Company for loans with similar terms.
ACCOUNTING FOR STOCK BASED COMPENSATION:
The Company accounts for stock-based compensation issued to employees using the
intrinsic value based method as prescribed by The Accounting Principles Board
Opinion No. 25, "Accounting for Stock Issued to Employees" (APB No. 25). Under
the intrinsic value based method, compensation is the excess, if any, of the
fair value of the stock at the grant date or other measurement date over the
amount an employee must pay to acquire the stock. Compensation expense, if any,
is recognized over the applicable service period, which is usually the vesting
period.
In October 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard No. 123, "Accounting for Stock-Based Compensation"
(SFAS No. 123). This standard, if fully adopted, changes the methods of
accounting for employee stock-based compensation plans to the fair value based
method. For stock options and warrants, fair value is determined using an option
pricing model that takes into account the stock price at the grant date, the
exercise price, and the expected life of the option or warrant. Compensation
expense, if any, is recognized over the applicable service period, which is
usually the vesting period.
The adoption of the accounting methodology of SFAS No. 123 is optional and the
Company has elected to continue accounting for stock-based compensation issued
to employees using APB No. 25; however, pro forma disclosures, as if the Company
adopted the cost recognition requirements under SFAS No. 123, are required to be
presented (see Note 6).
NOTE 2. PROPERTY, PLANT AND EQUIPMENT
The components of property, plant and equipment are as follows at December 31,
1996 and 1995:
<TABLE>
<CAPTION>
1996 1995
-------------- --------------
<S> <C> <C>
Membership recreational mining properties:
Land $ 926,378 $ 604,477
Buildings and improvements 102,874 66,845
-------------- --------------
1,029,252 671,322
Less accumulated depreciation (34,242) (24,605)
-------------- --------------
$ 995,010 $ 646,717
============== ==============
Alaska recreational mining properties:
Land $ 1,129,773 $ 1,202,373
Buildings and improvements 444,549 444,549
Vehicles and equipment 894,103 842,137
-------------- --------------
2,468,425 2,489,059
Less accumulated depreciation (1,002,816) (939,007)
-------------- --------------
$ 1,465,609 $ 1,550,052
============== ==============
</TABLE>
-17-
<PAGE>
<TABLE>
GLOBAL OUTDOORS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<CAPTION>
<S> <C> <C>
Outdoor Channel equipment:
Equipment $ 433,211 $ 159,635
Furniture and fixtures 64,001 37,289
Leasehold improvements 25,626 4,298
-------------- --------------
522,838 201,222
Less accumulated depreciation (136,254) (53,303)
-------------- --------------
$ 386,584 $ 147,919
============== ==============
Other equipment and leasehold improvements:
Furniture and fixtures $ 11,625 $ 1,625
Equipment 287,842 95,624
Vehicles 150,283 94,102
Leasehold improvements 6,578 4,578
-------------- --------------
456,328 195,929
Less accumulated depreciation (223,625) (116,878)
-------------- --------------
$ 232,703 $ 79,051
============== ==============
</TABLE>
NOTE 3. DEFERRED REVENUE
As of December 31, 1996 scheduled payments and amounts to be recognized as
income in future years from existing LDMA-AU and GPAA sales contracts are:
Revenue to Be
Scheduled Payments Recognized
------------------- -------------------
1997 $ 2,167,856 $ 1,433,552
1998 1,932,988 1,413,577
1999 1,764,842 1,378,547
2000 1,448,121 1,337,982
2001 1,113,140 1,403,689
Thereafter 411,505 3,728,887
------------ ------------
$ 8,838,452 $10,696,234
============ ============
-18-
<PAGE>
GLOBAL OUTDOORS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4. DEBT
<TABLE>
Long-term debt consists of the following at December 31, 1996 and 1995:
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
Note payable to individuals, secured by deed
of trust, payable in monthly installments of $805 including
interest at 8.5 percent, balance due December 2000. $ 97,237 $ 98,567
Note payable to an individual, secured by first deed of trust
on land, payable in monthly installments of $746 including interest at 9.5
percent, balance due May
1998. 63,020 65,889
Notes payable to an individual, secured by first deed of
trust on land, payable in monthly installments of $900 including interest at
8.0 percent, balance due May
1997. 89,917 93,373
Note payable to individuals, secured by first deed of trust
on land, payable in four annual installations
of $50,000 beginning in 1997, with an interest at 7.5 percent. 200,000 -
Note payable to the major stockholder,
secured by a motor home, payable at $520 per month including
interest at 9 percent. 51,070 -
Note payable to finance companies, secured by
vehicles, payable in monthly installments including interest
ranging from 7.75 to 9.75 percent. 27,566 16,462
Installment note payable to a bank, secured by accounts
receivable and inventory, guaranteed by three stockholders, payable in
monthly installments of $12,500 plus
interest at 9.75 percent. 412,500 -
---------- ----------
941,310 274,291
Less current maturities 303,593 21,567
---------- ----------
$ 637,717 $ 252,724
========== ==========
</TABLE>
-19-
<PAGE>
GLOBAL OUTDOORS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The aggregate maturities of long-term debt as of December 31, 1996 are as
follows:
1997 $303,593
1998 268,864
1999 172,854
2000 150,572
2001 45,427
--------
$941,310
========
As of December 31, 1996, the Company had a $750,000 revolving line of credit
agreement with a bank, $715,322 of which was outstanding. The line of credit is
guaranteed by three shareholders of the Company. The line of credit agreement
specifies a 9.25 percent interest rate and an expiration date of June 10, 1997.
The Company intends to renew the line of credit.
NOTE 5. CAPITAL LEASES
The Company leases various equipment which is accounted for as capital leases. A
schedule of future minimum lease payments together with the present value of the
minimum lease payments as of December 31, 1996 is as follows:
MINIMUM LEASE PAYMENTS FOR THE YEAR ENDING:
1997 $ 72,314
1998 79,801
1999 79,343
2000 51,752
2001 3,143
286,353
Less amount as representing interest 46,517
Present value of minimum lease payments 239,836
Less: current portion 47,172
$192,664
========
At December 31, 1996 the book value of the assets held under capital leases is
approximately $225,000. The amortization of these assets is included in
depreciation expense.
-20-
<PAGE>
GLOBAL OUTDOORS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6. STOCKHOLDERS' EQUITY
PREFERRED STOCK:
During 1990, the Company issued 71,835 shares of 10% noncumulative, convertible,
exchangeable, nonvoting preferred stock at $.001 par value for $5 per share. The
preferred shares have no liquidation preference over the Company's common stock.
The preferred shares are convertible at any time at the option of the holder
into common stock at the rate of one share of common stock for one share of
preferred stock. The preferred stock is exchangeable at the option of the Board
of Directors, in whole or in part, at the same rate of one share of common stock
for one share of preferred stock. On December 11, 1996, the Company authorized
the payment of a common stock dividend to holders of the preferred shares as of
December 31, 1996 at a rate of one common stock for every ten shares of
preferred stock. The remaining stock dividend was paid in January 1997 and is
reflected as a common stock dividend payable on December 31, 1996.
STOCK OPTION PLAN:
The Company has three stock option plans, Stock Option Plan 1 (Plan 1), Stock
Option Plan 2 (Plan 2), and the 1995 Stock Option Plan (1995 Plan). As discussed
in Note 1 above, the Company accounts for the above plans under APB Opinion No.
25, under which no compensation cost has been recognized.
Had compensation cost for these plans been determined consistent with SFAS No.
123, the Company's net income and earnings per share would have been reduced to
the following pro forma amounts for the years ended December 31, 1996 and 1995:
1996 1995
------------ ------------
Net loss As reported $(2,776,700) $ (49,897)
============ ============
Pro forma $(2,796,532) $ (552,085)
============ ============
Loss per share As reported $ (0.68) $ (0.01)
========= =========
Pro forma $ (0.68) $ (0.14)
========= =========
The fair value of each option granted to employees and directors is estimated
using the Black-Scholes option-pricing model on the date of grant using the
following assumptions: (i) no dividend yield, (ii) average volatility of 67 and
71 percent for 1996 and 1995, respectively, (iii) weighted-average risk-free
interest rate of approximately 6.3 percent, and (iv) expected life between 1 to
5 years.
-21-
<PAGE>
GLOBAL OUTDOORS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A summary of the status of the Company's three stock option plans at December
31, 1996 and 1995 and changes during the years then ended is presented in the
table and narrative below:
<TABLE>
<CAPTION>
1996 1995
------------ ------------
Shares Wtd. Avg Shares Wtd Avg
(000) Ex Price (000) Ex Price
-------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Outstanding at beg. of year 510 $ 2.86 350 $ 2.33
Granted 13 3.83 370 3.33
Exercised - - - -
Expired/Forfeited (20) 3.25 (210) 3.25
============== ============= ============= =============
Outstanding at end of year 503 2.69 510 2.68
============== ============= ============= =============
Exercisable at end of year 493 2.66 510 2.68
============== ============= ============= =============
Weighted average fair value of options
granted $ 3.13 $ 2.01
============== =============
</TABLE>
The 503,000 options outstanding at December 31, 1996 have exercise prices
between $2.25 and $4.00 and a weighted average remaining contractual life of 7.6
years.
In addition to the options granted above, a principal shareholder granted
100,000 options to an employee of the Company in October 1995 at an exercise
price of $3.50 per share which vested immediately. The options expire in October
2005.
On November 17, 1994, a principal shareholder granted options to purchase
200,000 shares each to three directors of the Company. In July 1995, two of
these directors subsequently assigned 40,000 shares each to an employee of the
Company. The options all vest immediately, have exercise prices of $2.33 and
expire November 17, 2004.
COMMON STOCK SUBSCRIPTIONS RECEIVABLE:
On June 22, 1993 certain stockholders and other individuals exercised a portion
of their options available under the stock option plan above. In connection
therewith, these individuals issued promissory notes to the Company whereby the
individuals are obligated to pay a total of $221,250, plus interest at 4 percent
per annum, due on June 30, 1999, secured by the related shares of common stock.
RETIREMENT OF TREASURY STOCK:
During 1996, the Company retired all of its common shares held in treasury.
-22-
<PAGE>
GLOBAL OUTDOORS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 7. IMPAIRMENT OF INVESTMENTS AND LONG-LIVED ASSETS
Effective January 1, 1996, the Company adopted Statement of Financial Accounting
Standard No. 121 "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed of." This statement requires, among other
things, that an impairment loss shall only be recognized when the carrying
amount of a long-lived asset exceeds the expected future cash flows
(undiscounted and without interest charges) and that, when appropriate, the
amount of loss to be recognized shall be measured as the amount by which the
carrying value exceeds the fair value of the asset. The adoption of this
statement did not have a material effect on the financial position or results of
operations of the Company.
NOTE 8. COMMITMENTS, CONTINGENCIES AND RELATED PARTY TRANSACTIONS
The Company is leasing its administrative facilities from a stockholder under an
agreement which requires monthly rent payments of approximately $0.34 per square
foot. The term of this lease is from January 1997 to December 2000. Rent expense
paid to the stockholder totaled $73,150 and $57,000 for the years ended December
31, 1996 and 1995, respectively. The building serves as security under the terms
of the note receivable from the stockholder. The note receivable, in the amount
of $280,057 at December 31, 1996, plus interest at six percent is due in 2000.
The Company initiated an agreement with one of its directors during 1994 to
receive legal services on a monthly basis. The agreement calls for the Company
to pay the director a monthly retainer in the amount of $5,000. In the event
that services rendered by the director on behalf of the Company exceed $5,000 in
any given month, the agreement calls for the director to receive shares of the
Company's common stock at its then current fair market value as payment for the
services in excess of $5,000.
Effective October 1995, the Company entered into an agreement with an employee
of The Outdoor Channel, Inc. which expires in January 2000. Among other
provisions, the agreement provides for a salary of $180,000 per year and bonuses
paid at least once a year as determined by the Compensation Committee of the
Board of Directors.
>From time to time Global is a party to litigation arising in the normal course
of its business, none of which existing on the date hereof in the opinion of
management will have a material effect on Global's operations or financial
position.
-23-
<PAGE>
GLOBAL OUTDOORS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 9. INCOME TAXES
The components of the benefit for income taxes for the years ending December 31,
1996 and 1995 are summarized as follows:
1996 1995
---------- ----------
Current:
Federal $(847,159) $ -
State (149,499) -
Deferred:
Federal 662,000 (22,952)
State 117,000 (7,630)
---------- ----------
Income tax benefit $(217,658) $ (30,582)
========== ==========
The following table reconciles the federal statutory income tax rate to the
effective tax rate of the benefit for income taxes:
1996 1995
---------- ----------
Federal statutory income tax rate (34.0)% (34.0)%
State income taxes, net of federal benefit (5.6) (4.0)
Effect of net operating loss carry forward net utilized 14.0 -
Valuation of temporary differences 15.3 -
Other 2.4 -
---------- ----------
Effective tax rate (7.9)% (38.0)%
========== ==========
1996 1995
----------- ----------
Bad debts $ 17,000 $ 4,000
Depreciation 95,000 73,000
Accruals 57,000 14,000
Deferred revenue 743,000 413,000
Net operating loss 371,000 -
----------- ----------
1,283,000 504,000
Valuation allowance (1,283,000) (504,000)
----------- ----------
Net deferred tax asset $ - $ -
=========== ==========
The Company has available for federal and state income tax purposes, net
operating loss carryforwards of approximately $930,000 and $1,640,000,
respectively, which expire in the year 2011.
-24-
<PAGE>
GLOBAL OUTDOORS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 10. BUSINESS COMBINATION
On February 10, 1995, the Company effected a business combination with GPAA by
exchanging 2,500,000 shares of its common stock for all of the common stock of
GPAA. GPAA was 100% owned by the majority stockholders of the Company. The
agreement also calls for an additional 1,500,000 shares of common stock to be
issued if certain earnings or valuation levels are attained. The principal
business of GPAA is the sales of memberships in a gold prospecting club. The
GPAA also generates revenue from advertisers in a bi-monthly magazine and
through merchandise sales. The combination was accounted for in manner similar
to a pooling of interests. GPAA previously had a year-end of February 28 and as
a result of the combination has adopted a December 31 fiscal year-end.
NOTE 11. LEASE AGREEMENTS
The Company leases its facilities and certain equipment under noncancelable
operating leases which expire at various dates through December, 2000. In 1995,
under the terms of an operating lease, the Company acquired certain rights to
utilize certain satellite equipment. This lease was to expire on July 7, 1998.
The Company terminated this agreement on March 1, 1997 and entered into a new
satellite equipment lease that will expire on June 30, 1998. This agreement
requires monthly payments of $115,000 during the period March 1, 1997 through
June 30, 1997, $150,000 through October 31, 1997, $170,000 through February 28,
1998 and $190,000 through June 30, 1998.
In addition, equipment is leased under two separate operating lease agreements
expiring at various dates through December 2000. Monthly payments on the two
agreements total approximately $1,500. The total minimum rental commitment under
these operating lease agreements (including the operating lease with a
stockholder, see Note 8) is as follows:
1997 $1,764,012
1998 1,214,012
1999 114,012
2000 5,890
-----------
$3,097,926
===========
During the years ended December 31, 1996 and 1995, the Company incurred
$1,490,812 and $984,019, respectively, in rental expenses.
NOTE 12. SUBSEQUENT EVENTS
In February 1997, the Company pledged 250,000 shares of common stock in lieu of
a deposit under the terms of a satellite equipment lease (see Note 11 above).
In February 1997, Wilma M. Massie, a principal shareholder of the Company,
loaned the Company $125,000 on a note bearing interest at 10%.
In April, 1997, the Company entered into an agreement with Perry T. Massie,
Thomas H. Massie and Wilma M. Massie (the Principal Stockholders), whereby the
Principal Stockholders agreed to provide for the cash flow requirements of the
Company over the next twelve months by means of loans or equity investments (see
Note 1).
-25-
<PAGE>
GLOBAL OUTDOORS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 13. BUSINESS SEGMENT INFORMATION
<TABLE>
Business segment information is summarized as follows:
<CAPTION>
Additions to
Property,
Income (Loss) Equipment &
Before Depreciation and Leasehold
Revenues Income Taxes Assets Amortization Improvements
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1995
Alaska trip $ 656,161 $ 315,591 $ 1,550,052 $ 81,000 $ 45,750
The Outdoor
Channel 314,958 (816,637) 897,041 21,306 135,189
Membership
sales of
recreational
prospecting
and mineral
rights and
merchandise
sales 3,133,110 1,648,575 988,918 9,000 222,158
Other 236,738 (1,228,008) 1,140,844 26,500 70,121
----------- ------------ ------------ ------------- -------------
$4,340,967 $ (80,479) $ 4,576,855 $ 137,806 $ 473,218
=========== ============= ============ ============= =============
</TABLE>
<TABLE>
<CAPTION>
Additions to
Property,
Income (Loss) Equipment &
Before Depreciation and Leasehold
Revenues Income Taxes Assets Amortization Improvements
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1996
Alaska trip $ 828,901 $ 158,678 $ 1,465,608 $ 69,700 $ 54,365
The Outdoor
Channel 743,143 (1,983,518) 679,519 100,197 321,616
Membership
sales of
recreational
prospecting
and mineral
rights and
merchandise
sales 3,399,420 150,841 1,047,250 36,667 357,930
Other 286,544 (1,320,359) 1,033,521 56,580 185,400
----------- ------------ ----------- ------------- -------------
$5,258,008 $ 2,994,358 $4,225,898 $ 263,144 $ 919,311
=========== ============= =========== ============= =============
</TABLE>
-26-
<PAGE>
GLOBAL OUTDOORS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 14 RESTATEMENT OF CONSOLIDATED FINANCIAL STATEMENTS
The Company's 1996 consolidated financial statements have been restated to
reflect a reduction in revenue from Lost Dutchman's membership sales of $227,000
and an increase of $227,000 in deferred revenue. As previously reported
Membership sales for 1996 was $3,137,447. As restated Membership sales for 1996
is $2,910,447. As previously reported Net loss for 1996 was $2,549,700. As
restated Net loss for 1996 is $2,776,700. As previously reported Loss per share
for 1996 was $(0.62). As restated Loss per share for 1996 is $(0.68). As
previously reported Deferred revenue, current for 1996 was $1,433,552 and
Deferred revenue, less current portion for 1996 was $424,230. As restated
Deferred revenue, current for 1996 is $0 and Deferred revenue for 1996 is
$2,084,782.
-27-
<PAGE>
SIGNATURES
In accordance with section 13 or 15 (d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
(Registrant) GLOBAL OUTDOORS, INC.
---------------------
By: (Signature and Title) /s/ Perry T. Massie
-----------------------------------------
Perry T. Massie, President
Dated: December 16, 1998
-----------------
-28-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-30-1996
<CASH> 82,027
<SECURITIES> 0
<RECEIVABLES> 592,391
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 784,494
<PP&E> 3,079,906
<DEPRECIATION> 0
<TOTAL-ASSETS> 4,225,898
<CURRENT-LIABILITIES> 1,495,785
<BONDS> 0
0
61
<COMMON> 82,448
<OTHER-SE> (267,559)
<TOTAL-LIABILITY-AND-EQUITY> 4,225,898
<SALES> 5,258,008
<TOTAL-REVENUES> 5,258,008
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> (8,252,366)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (2,994,358)
<INCOME-TAX> (217,658)
<INCOME-CONTINUING> (2,776,700)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,776,700)
<EPS-PRIMARY> (0.68)
<EPS-DILUTED> (0.68)
</TABLE>
